Vitalik Buterin proposes self-custody for cryptocurrency
Vitalik Buterin has emphasized the importance of self-custody. This goal can be achieved through social recovery and multi-signature solutions, according to a Reddit post by him.
According to Buterin’s recent post, multisig wallets protect funds from being lost due to centralized entities. By using a multi-sig wallet, users can enjoy secure custody without being solely responsible for security.
It’s similar to multi-sig wallets, as a single key can sign transactions, but with the added security of being able to recover funds if the key is lost through a group of keys.
According to Buretin, social recovery wallets are easier to use than multi-sig wallets, particularly with emerging technologies like ERC-4337 account abstraction and upcoming user-friendly wallets like Soul Wallet.
It would be advisable to use social recovery wallets for hot wallets that store a small percentage of an organization’s funds as they become more mature. Multisig wallets are better suited for cold wallets containing larger sums of money.
Buterin mentioned in the article the value of social recovery wallets and multi-sig wallets as methods for safeguarding cryptocurrency assets. He explained that both of them leverage the idea of signatories or guardians to secure transactions further. Its use cases and implementation, though, vary.
He emphasized that because multi-sig wallets require multiple signatures to authorize a transaction, they are more secure than single-key wallets. This is due to the fact that an attacker must compromise various keys in order to steal the funds. Multisig wallets are frequently used for cold storage or high-value transactions where the extra security is worth the hassle of coordinating multiple signatures.
He explained, on the other hand, that social recovery wallets use a single key for transactions but allow recovery if the key is lost or compromised. Buterin stated that this is accomplished through the use of a group of guardians who can collectively authorize a recovery process. Social recovery wallets are frequently used for internet-connected hot wallets and day-to-day transactions.
As social recovery wallet technology advances, it may become a more popular option for hot wallets. Multi-sig wallets, on the other hand, are still used for cold storage or high-value transactions.
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